Insurance Blog

Wal-Mart’s health insurance leap

Eyebrows popped at the recent announcement that Wal-Mart will offer U.S. employees and their families free heart, spine and transplant surgeries in a bold move aimed at providing quality employee health care while cutting health insurance costs for the nation's largest retailer. Even part-time workers with at least one year of service can take advantage of the program.

Wal-Mart began offering free transplant surgery at the Mayo Clinic in 1996. This latest expansion of its "Centers for Excellence" program is aimed at providing top-quality care while providing the retail giant with savings through "exclusive and unique bundled pricing arrangements" with the participating hospitals.

Michael McMillan, executive director of managed care for the Cleveland Clinic, was equally upbeat. "We call it the triple win. It's a boost in quality, it's an improvement in value and it's no cost out of pocket for employees, so we think it is a great opportunity," he told Insurance Journal.

Carving out direct-to-employer bundled service arrangements effectively allows businesses to knock the costs of certain common, high-ticket medical procedures out of their insurance pools. This allows employers to offer health insurance plans at a lower cost to employees, including those with low-paying jobs who might otherwise forgo coverage.

Cleveland Clinic, whose doctors are not paid per procedure, has had a similar direct-to-employer arrangement for heart surgery services for employees at Lowe's home improvement stores since 2010 and recently signed a similar arrangement with aerospace giant Boeing. McMillan says that while such arrangements only accounted for $1 million of Cleveland Clinic's $5.83 billion in annual revenue, they have exceeded expectations so far.

"It's a growing trend and an important new aspect of employers' ability to manage quality and improve their value proposition. We see more and more large employers asking about this kind of approach," he says.

Wal-Mart's 2006 decision to sell certain prescription drugs for $4 caused a ripple effect as other retailers followed its lead.

What do you think? Is Wal-Mart's free major surgery program another health insurance game changer?

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1 Comment

insurancebroker

October 29, 2012 at 3:20 am

Thanks for Sharing..I give talks about how the health insurance law strengthens Medicare. I come in contact with many seniors.
The Ryan budget moves Medicare to a voucher program eventually. I can’t imagine the seniors I see shopping for a plan on the private market. The confusion would be great.
This shift to a voucher program would foist an unimaginable amount of stress into the lives of seniors. Really not good.

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